Skip to content

Posts tagged ‘2015 ONSC 5816’

Was Your Marriage Contract Signed “Under Duress”?

duress

Was Your Marriage Contract Signed “Under Duress”?

About-to-be-married couples are wise to protect themselves by signing a marriage contract beforehand. But the key to having those agreements hold up is that they must be freely and voluntarily executed.

We’ve all heard stories of pre-nuptial contracts being signed by the happy couple on their wedding day, virtually on the altar. Or else cases where the couple are negotiating the agreement for months, against the backdrop of a year of planning and thousands of dollars in deposits laid down, and it’s finally signed at a time when pre-wedding stress is at an all-time high.

Are marriage contracts signed under these conditions worth the (embossed) paper they are written on?
In Ontario, the Family Law Act and the related jurisprudence says: “it depends”. First of all, the legislation lays out certain types of clauses that are never valid (such as a clause attempting to prohibit a spouse from remarrying after separation), and sets out various scenarios that can prompt the court set aside all or part of a marriage contract. Among those scenarios – by general reference to basic contract principles established in the cases – is the concept that a contract that was signed under duress will not be enforced in law.

“Duress” is colloquially regarded to mean those situations where one intended spouse has put some sort of pressure on the other spouse to sign what is usually alleged after-the-fact to be an unfavourable, unfair, or one-sided agreement.

Legally, the meaning is a bit more precise, even though the Family Law Act itself does not contain a definition for this term. However, in a case called Ludmer v. Ludmer, the court examined the nature of duress, stating:

Duress involves a coercion of the will or a situation in which one party has no realistic alternative but to submit to pressure. There can be no duress without evidence of an attempt by one party to dominate the will of the other at the time of the execution of the contract. To prove duress, the applicant must show that she was compelled to enter into the marriage contract out of fear of actual or threatened harm of some kind. There must be something more than stress associated with a potential breakdown in familial relations. There must be credible evidence demonstrating that the complaining party was subject to intimidation or illegitimate pressure to sign the agreement.

So what forms does “duress” take, in the real world? In the case we commented on last week, Shair v. Shair, the court considered whether the wife had been subject to duress in signing a marriage contract that she later complained had stripped her of certain support rights that she would otherwise have under the Family Law Act and Divorce Act.

However, the court rejected her claim that she signed the agreement out of duress, finding instead that she:

“…chose to sign it voluntarily as she wanted to be married and she trusted that the Applicant husband would treat her fairly independent of the clear language of the marriage contract. The option of not signing the marriage contract in the form as presented and returning to Romania, or extending her visa, were both open to her and she pursued neither.”

For the full text of the decisions, see

Ludmer v. Ludmer, 2013 ONSC 784, [2013] O.J. No. 699

Shair v. Shair, [2015] O.J. No. 4883, 2015 ONSC 5816

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at RussellAlexander.com

In Family Law, “Disclosure” Means “Full Disclosure”

disclosure

In Family Law, “Disclosure” Means “Full Disclosure”

In a recent case the court examined in detail the so-called “disclosure” that had been provided by the husband in a matrimonial dispute, and the effect any deficiencies might have on the legal validity of a negotiated marriage contract that relied on that information.

As background, the spouses had met almost 20 years ago in the now-47-year old wife’s native Romania where she worked as a cosmetician. She also owned her own condominium while studying social psychology. The husband, now aged 61, had sponsored her to come to Canada. After having a traditional marriage for 18 years, they decided to separate.

At the time of their union they had entered into a relatively straightforward marriage contract in which each of them waived spousal support from the other. The validity of this marriage contract became an issue requiring the court’s determination, since its purported effect was to foreclose the wife from pursuing the spousal support to which she would otherwise be eligible under Ontario law.

The wife complained that the marriage contract was unfair: It’s In the actual wording of the contract the husband had failed to disclose the full extent of his assets, liabilities and debts, and had been vague and incomplete in his job description, all of which might have affected the calculation of any spousal support entitlement she might have had under the contract.

The wife’s allegations of non-disclosure were important because section 56(4) of the Ontario Family Law Act specifically allows a marriage contract to be set aside if one of the spouses fails to disclose significant assets, debts or liabilities when the marriage contract was made.

The court considered the circumstances, and pointed out that in the context of negotiating a domestic contract, the duty to make full and honest disclosure is required to protect the integrity of the result of negotiations undertaken in the “uniquely vulnerable circumstances” inherent in marital disputes. In this case, the court observed:

It cannot be said that the Applicant husband provided complete, fair and frank disclosure of his relevant financial information. Clearly he did not. The marriage contract refers only to his job as a mechanic, not a business owner, and his ownership of a family residence, not a commercial building. It is not enough that he told the Applicant wife he owned his home and worked as a mechanic. It is further not enough if he told her he owned the Bloor Street property and his own mechanic business. The Applicant husband never disclosed the market value of his home, the market value of the Bloor Street property, or any mortgages thereunder. He never disclosed the value of his companies, or his belongings including his tools which he values at $25,000-$30,000. The Applicant husband did not tell the Respondent wife anything about his income and he did not produce his income tax returns or bank statements to her or [her lawyer]. I have concluded, therefore, that the Respondent wife has satisfied her onus of proving her circumstances fall within s. 56(4)(a) of the Family Law Act.

(The court was quick to add that the husband had no lied about this information; rather it found he “simply did not disclose his assets, debts and liabilities in a meaningful way”).

Still, the court made several factual findings that precluded a decision to set the marriage contract aside entirely, including the observation that even with full disclosure as to assets and incomes, the wife’s spousal support entitlement would not have changed (since the contract itself did not refer to the business, commercial building, property value, income, or the value of his various companies). The contract remained legally valid because the husband’s “shortcomings in disclosure did not impact significantly upon the final agreement reached between the parties”. More importantly, the wife had independent legal advice prior to signing it, and ample written opinions from lawyers advising against doing so, which advice she chose to ignore.

Still, the court set the contract aside because it left matters in an unconscionable state in light of the sacrifices the wife made to come to Canada from Romania almost 20 years ago: she was allowed to pursue a claim for spousal support pursuant to the provisions of the Family Law Act.

For the full text of the decision, see:

Shair v. Shair, [2015] O.J. No. 4883, 2015 ONSC 5816

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at www.RussellAlexander.com